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How Much House Can I Afford?

Mortgage Affordability Calculator - Learn how much home you can afford to buy based on your salary or income with our "how much house can I afford calculator". This simple mortgage calculator uses your income monthly bills and available down payment to determine how much mortgage you can afford based on current loan requirements and your debt to income ratios.

Calculate the maximum home loan amount, mortgage payment and home price you can afford based on selected mortgage terms from 10 years to 40 years and current mortgage rates with this home affordability calculator.

You will receive personalized suggestions for the down payment amount and loan program to maximize how much home you can afford to purchase. Read detailed information to learn what determines the how much home you can afford.

How Much House can You Afford Calculator

Step 1: Enter Your Income
Step 2: Enter Funds Available
Step 3: Enter Monthly Bills
Step 4: Select Mortgage Rate and Terms and click: "How Much House Can I Afford"

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 Calculate How Much Home You Can Afford  ///

Step 1: Enter Your Monthly Income Information
Enter the total "Gross" (before taxes or pre-tax) monthly income of all borrowers to determine how much house you can afford based on your income.
Total Monthly Income
Step 2: Enter Your Funds Available ///
Enter the total amount of cash available for buying a home. This includes amount to be used for down payment and mortgage closing costs.
Funds for Down Payment & Closing
Step 3: Enter Your Monthly Bills ///
Enter your total "Minimum Required Monthly Payments" for each of the type of monthly liability indicated below.
Auto Loan(s)
Credit Card(s)
Student / Personal Loan(s)
Other Loan(s) (i.e. Boat, RV, Motorcycle)
Other Legal Liabilities - these may or may not be reported on your credit report or paystubs but must be used for loan qualifying purposes to determine how much house you can afford.
Child Support / Alimony / Palimony
Liens / Judgement Payments  
Step 4: Enter Mortgage Rate and Loan Terms ///
Select current mortgage rate and mortgage loan terms from 10 years to 40 years to determine exactly how much home mortgage you can afford.
Mortgage Rate
Mortgage Term
Annual Property Taxes
Annual Homeowners Insurance

 

Results Of How Much House You Can Afford Calculator ///

You Can Afford a House of Up To:

Below are details of how much house you can afford based on your income and mortgage terms.

 Your Detailed Report of How Much Home and Mortgage ///
Year Mortgage
Your Maximum Home Price
Down Payment Amount of
Maximum Loan Amount at LTV
Maximum Mortgage Payment You can Afford
Mortgage Payment (Principal & Interest only)
Monthly Property Taxes
Monthly Homeowners Insurance
Estimated Private Mortgage Insurance / PMI
Total Mortgage Payment (PITI Payment)
Debt to Income Ratio Calculations
Front-End Debt to Income Ratio
Back-End Debt to Income Ratio
Down Payment and Mortgage Closing Cost Details
Suggested Down Payment
Estimated Closing Costs - (Est. at 2.50% of loan amount*)
Total Estimated Funds Required to Buy Home
Your Total Funds Available
Funds Required for Escrow Closing
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Link to this Mortgage Affordability Calculator. Copy & Paste HTML code in below:


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  • Down Payment less than 5%, use our FHA calculator to view your detailed monthly FHA mortgage payment with taxes and insurance.
  • Thinking of refinancing? Our mortgage refinance calculator allows you to compare refinance mortgages.

 

What Determines How Much House You Can Afford?

This calculator determines the mortgage amount and house you qualify to purchase by using traditional mortgage qualifying guidelines and loan requirements. The main factors that determine how much mortgage you can afford are the following:

  • Your Income
  • Monthly Bills and Credit History
  • Available Down Payment and Savings

The combination of these items is what determines how much home and what kind of loan you can qualify for. Learn how each item is reviewed by mortgage lenders and works together to determine you maximum mortgage loan amount and maximum house you can buy.

Your Incomes Impact on How Much House You can Afford

Your income is the most important item that determines how much home you will be able to purchase. Lenders use your income to determine an affordable montly mortgage payment according to mortgage qualifying guidelines.

Mortgage lenders want to provide a mortgage payment that is easily affordable for borrowers to pay on time and still leave enough money monthly for all other bills, food, clothing, gas, entertainment and savings.

The affordablity of a mortgage payment is based on a percentage of your income that is allocated towards a mortgage payment. This percentage is referred to as "debt to income ratios" or "DTI" or "DTI".

There are two types of mortgage debt to income ratios used for qualifying for a mortgage.

  • Front-End Ratio
  • Back-End Ratio

Conventional loans, jumbo loans and FHA mortgages use these DTI calculations.  VA loans use only a single debt to income ratio to determine an affordable mortgage amount.

Below you will learn how debt to income ratios are calculated to determine how much house and mortgage you can afford now and in the future.

Front End Debt to Income Ratio

The front-end debt to income ratio is the percentage of your income that can be applied towards a mortgage payment.

Mortgage lenders have determined that a front end debt to income ratio in a range of 28% - 34% is affordable for the majority of individuals or families buying a home.

The front debt to income ratio is the maximum monthly mortgage payment divided by your gross monthly income which equals the maximum mortgage payment you can afford.

The higher your income the larger monthly mortgage payment you can afford based on this DTI ratio.

Also, the lower the mortgage rates the larger the loan amount that can be financed based on the same monthly mortgage payment.

Back End Debt to Income Ratio

Your total monthly revolving bills, like car payments, credit cards payments, loans, child support and any other items reported on your credit report or deducted from your paystubs is used to calculate the back end ratio.

Ideally, mortgage guidelines have determine that these bills should total approximately 8%-12% of your gross monthly income.

The back-end DTI is your monthly mortgage payment plus your monthly revolving debt reported on your credit report divided by your gross monthly income. This calculation should be between 36% - 42% of your gross income.

If you have significant montly liablilities that exceed suggested DTI guidelines, then you will qualify for a smaller mortgage payment, thereby lowering the mortgage amount you can afford.

Income History

Beyond calculation debt to income ratios's to determine an affordable mortgage payment, lenders will review your income and job stability.

Mortgage lenders will review your last 2 years income. What they are looking for is stability in your job and income to determine your ability to repay the mortgage in a timely basis now and in the future based on your past income history. How much home you can afford will be impacted by these calculations.

Your Monthly Bills and Credit History

Lenders will review your credit history and bills. It is important to have a good credit history, especially for the most recent two years and a limited amount. Your credit history is used to determine you ability and inclination to pay your liablilities in a timely fashion.

The majority of mortgage programs require a minimum of credit score of 620 to qualify for a mortgage.

As noted above, only certain bills are used in your DTI calculations that directly affect the how much home you will be able to afford.

Here is a list of the most bills used in calculations to determine how much mortgage you can prequalify for:

  • Car Payment
  • Credit Cards
  • Personal & Student Loans
  • RV, Boat, Motorcycle Loans
  • Other Mortgage Loans or Home Equity Lines of Credit
  • Child Support or Alimony
  • Federal Tax Liens

In some cases you maybe able to not count certain bills in your debt to income calculations if there is less than 3 months left of payments. This may increase how much home you can afford since it improves your debt to income ratios. This is on a case by case basis and should be discussed with your mortgage lender.

Down Payment and Cash Savings

Down payments are also a factor that determines how much home you can afford to purchase since mortgage loans require a minimum down payment amount.

Your available down payment amount must equal the minimum down payment of a home price. If your income qualifies you for a $300,000 mortgage but you a down payment for only a $150,000 home then your down payment will be the limiting factor as to how much home you can afford to finance.

Mortgage loan programs require a specific down payment, such as a FHA loan requires a 3.5% down payment, conventional loans from 5%.

An example of how your down payment affects how much you can afford. If you have $10,000 available, you would have the 5% down payment for a $200,000 required by the mortgage lender which is why your available down payment directly impacts how much house you can afford to purchase.

So as you can see, the combination of all of this factors determines how much mortgage you will qualify for and the amount of the home you can afford.

Now that you have an understanding of the mortgage qualifying process and how you loan amount is determined, scroll up to the top use the above mortgage affordability calculator to determine your maximum home price.

Already Have an Idea of How Much Real Estate You Can Afford Based on the Above Calculator, What Should You Do Next?

If you have an idea of your maximum mortgage amount and home sales price, you next step is to get prequalified for a mortgage.

Once prequalified by a mortgage lender you can obtain a mortgage preapproval letter to show Realtors exactly how much house you can afford and what price range of homes you should be looking at.

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How Much House Can I Afford Calculator Disclosure- This home affordability calculator is for informational purposes only and is not meant to replace a consultation with a mortgage professional. This calculator determines how much house you can afford by estimating the closing cost of obtaining a mortgage at an average of 2.5% of the loan amount. This closing cost estimate covers average loan origination fee's, discount points, lender, title, escrow, notary. Your actual closing cost maybe higher or lower dependant on your mortgage qualification of how much house you can afford and amount of prepaid interest and the impound account costs based on the maximum home sales price.

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